New Endeavor Insight Report Highlights Strategies for Supporting More Women Founders in Reaching Scale
If more women entrepreneurs scale their businesses, it could yield significant benefits for the economy and society at large. A new report by Endeavor Insight with support from Google for Startups draws lessons from successful women founders to better understand pathways to scale and strategies for overcoming some of the most common challenges that women entrepreneurs face.
More women are becoming entrepreneurs each year, but they are still less likely to start and scale their own companies compared to men.
More women are becoming entrepreneurs each year. Between 1997 and 2012 the number of women-owned businesses increased by over 80 percent (compared with 31 percent for men-owned businesses). Although women are making gains in entrepreneurship, gaps still remain. U.S. Census data shows that women only own 36 percent of companies, and only 26 percent of companies that had scaled to 50 employees or more.
Previous Endeavor Insight research has shown that companies that scale to 50 employees or more provide greater economic benefits than those that do not. If women were to scale businesses to employ 50 or more people at the same rate as men, it would have the potential to generate over 4 million new jobs and add over $500 billion in additional productivity each year to national GDP.
How can more women in entrepreneurship scale their companies and maximize their economic impact?
Endeavor Insight examined data on more than 1,000 women entrepreneurs, in addition to interviews with representatives of entrepreneurship support organizations. The report finds that tangible steps can be taken to better support women founders.
- Career advancement. Women founders in this study who scaled their companies often gained valuable industry experience early in their careers and achieved high-level positions at other companies prior to starting their own businesses. Over 60 percent of the women founders who scaled their companies met their mentors in the years of their career before they actually became entrepreneurs. If more companies prioritize career advancement opportunities for women, it would help pave the way for the next generation of female founders.
- Mentorship. Mentorship is one of the clearest differences between women entrepreneurs who were able to scale their businesses to 50 or more employees and those who were not. Those who scaled were 10 percent more likely to have mentors who were successful entrepreneurs themselves, according to the interviews and surveys conducted for this report. While this new analysis confirms that access to finance is more of a challenge for women founders compared to men, securing capital may be a symptom of underlying barriers to building a robust network. Several of the founders who raised large amounts of capital noted the role that mentors played in the fundraising process.
" I didn’t realize that my decades in corporate America would become a framework for our growth and success at ShearShare."
Decision-makers who wish to support women in entrepreneurship can also take specific steps to identify and support more women entrepreneurs who start companies and scale their businesses.
- Curate programs and events to increase access among women founders. More women can benefit from existing programs and events that support entrepreneurs, especially if they are designed to create deeper engagement.
- Provide more support for women who are scaling their businesses, in addition to the existing initiatives that assist with starting or building companies at earlier stages. Helping more women to scale their companies is critical for addressing the gender gap in entrepreneurship. However, very few programs focus on assisting women founders who have moved beyond the early stages of their company’s growth.
" As entrepreneurs start to scale, it can be harder for them to find other founders with similar challenges to share ideas and experiences. Programs focused on scaling can help bridge this gap."
- Reduce gender-related bias among investors throughout every step of the investment process. Common mechanisms for sourcing, screening, and investing in entrepreneurs reinforce prejudices that exist more broadly within society. Investors can track race and gender at all stages, remove referral requirements, and be mindful of treating founders consistently throughout their due diligence and portfolio management processes.
- Connect women founders with strong networks and high-quality mentors. Supporters who work with women entrepreneurs can help to create connections that are structured to maximize their benefits.
" We think about mentorship in a matrix perspective — mentors that are domain-specific, skillset-specific, and company stage-specific… This specificity helps address the wide variety of challenges entrepreneurs face."
- Align support for women founders with inclusion efforts happening across underrepresented groups. In order to develop inclusive programs for women entrepreneurs, practitioners should develop an environment that welcomes women from all backgrounds.